Part 1

Waterways has a sales mix of sprinklers, valves, and controllers as follows.

Annual expected sales:
Sale of sprinklers	460,000 units at $26.50
Sale of valves	1,480,000 units at $11.20
Sale of controllers	60,000 units at $42.50
Variable manufacturing cost per unit:
Sprinklers $13.96
Valves $ 7.95
Controllers $29.75
Fixed manufacturing overhead cost (total) $760,000
Variable selling and administrative expenses per unit:
Sprinklers $1.30
Valves $0.50
Controllers $3.41
Fixed selling and administrative expenses (total) $1,600,000

Instructions

(a) Determine the sales mix based on unit sales for each product.

(b) Using the annual expected sales for these products, determine the weighted-average unit contribution margin for these three products. (Round to two decimal places.)

(c) Assuming the sales mix remains the same, what is the break-even point in units for these products?

Part 2

The section of Waterways that produces controllers for the company provided the following information.

Sales for month of February: 4,000

Variable manufacturing cost per unit: $9.75

Sales price per unit: $42.50

Fixed manufacturing overhead cost (per month for controllers): $81,000

Variable selling and administrative expenses per unit: $3.00

Fixed selling and administrative expenses (per month for controllers): $13,122

Instructions

(a) Using this information for the controllers, determine the contribution margin ratio, the degree of operating leverage, the break-even point in dollars, and the margin of safety ratio for Waterways Corporation on this product.